2013 (6) TMI 815 - AT - Income Tax

Summary

Issues involved:
The appeal by the revenue against the order of the CIT(A)-XIX, New Delhi dated 20.07.2012 in Appeal No.223/2011-12 for AY 2004-05 regarding the quashing of the reopening of the assessment and holding the assessment to be null and void.

Reopening of Assessment:
The Assessing Officer made an addition of Rs. 10 lakh u/s 68 of the Act in the reassessment proceedings. The Commissioner of Income Tax(A) allowed the appeal of the assessee by holding that the reassessment was not in accordance with the provisions of the Act and was null and void. The revenue contended that the reopening was valid as the ACIT records his satisfaction before forwarding the proposal to the Commissioner of Income Tax(A). The assessee argued that the reopening was not valid as there was no order u/s 143(3) of the Act during the original assessment proceedings. The Tribunal observed that the reopening notice was issued after the expiry of four years from the end of the relevant AY, and the Assessing Officer should have obtained permission from the Joint/Additional Commissioner of Income tax as per section 151 of the Act. The Tribunal held that the reopening was not in accordance with the provisions of the Act and was liable to be quashed.

Legal Principles:
The Tribunal referred to the judgment of the Hon'ble Jurisdictional High Court of Delhi in the case of C.I.T. vs S.P.L's Siddhartha Ltd. and emphasized that the satisfaction of one authority cannot be substituted by another authority. The Tribunal highlighted that if a particular authority has been designated to record their satisfaction on any issue, it is that authority alone who should apply their independent mind. The Tribunal also cited the principle that if a statutory authority has been vested with jurisdiction, they must exercise it according to their own discretion, and failure to do so renders the action invalid.

Decision:
The Commissioner of Income Tax(A) decided in favor of the assessee, noting that the permission for reopening was obtained from the Commissioner of Income Tax instead of the Joint/Additional Commissioner as required by law. The Tribunal upheld this decision, following the legal principles laid down by the High Court. The Tribunal dismissed the revenue's appeal, concluding that the reopening of the assessment was not in accordance with the provisions of the Act and was therefore null and void.